A few weeks ago, I created a method outline to judge the viability of Amazon’s investment in Indonesia by 2018. This consisted of a few calculations to determine the average basket size and the ratio of orders to people. I also conducted an interview with the two owners of Mumu, and gained valuable insight concerning Indonesia’s e-commerce market. Although I spent a large majority of my time on research, I encountered some trouble finding the total number of orders in each individual country as Amazon does not disclose that information. So instead I decided to take the following steps:
Retail sales penetration:
- For each country find total retail sales per year
- Amazon sales per year in that country
- Divide no. 2/no. 1
- Calculate average penetration
- Calculate total retail sales in indonesia
- Find total online retail sales
- Use Lazada total sales times market share to find the total size of the retail market in Indonesia
Amazon market share:
- Find the total online sales in their 4 most successful makets
- Find Amazon’s net sales per country
- Divide no.2/no.1 for each country
- Add all the values in no.3 together and divide it by 4 to find the average market share
- Assuming that Amazon captures the average (mean) value of their successful markets, is it still viable?
I also added four sections which serve as the argument. The benefits of operating in Indonesia are under the titles: “Middle class and consumer behaviour” and “mobile / desktop usage”. The challenges of operating in Indonesia is under “Infrastructure that facilitates e-commerce” and “Laws and regulations”.